Should the United States Rethink Sanctions Against Iran?

The debate about how to counter Iran's apparent pursuit of a nuclear weapons capability is not new. Two decades ago, European officials took the lead on the Iran portfolio, hoping to prove that diplomacy coupled with trade could bring the Islamic Republic in from the cold. They failed. Between 2000 and 2005, European Union trade with Iran almost tripled. During the same period, Iranian authorities invested perhaps 70 percent of the hard currency windfall in military programs and, according to IAEA reports, actively worked on nuclear bomb components.

Iranian officials have acknowledged their diplomacy is geared less toward conflict resolution and more toward delay. In June 2008, against the backdrop of reformers seeking to claim credit for Iran's nuclear progress, Abdollah Ramezanzadeh, former President Mohammad Khatami's spokesman, suggested the "Dialogue of Civilizations" was a tactic to distract the West from Iran's nuclear progress. Then, in October 2011, former nuclear negotiator Hassan Rowhani credited his willingness to suspend Iran's nuclear enrichment with successfully delaying Security Council action at a time when Iran needed to install new centrifuges anyway.

Effective sanctions are necessary if the West seeks to avoid either an Iranian nuclear breakout or preventive military action. Twice before, Iranian authorities have abruptly reversed course on demands and policies they swore were unalterable. In January 1981, Ayatollah Khomeini released American hostages because Iraq's invasion the previous September had made the cost of isolation too great to bear. Then, in July 1988, after more than six years of stalemate, Khomeini accepted a ceasefire ending that war, abandoning his goal to oust Saddam and "liberate Jerusalem." He described that decision as "drinking a chalice of poison" but regime survival took precedent.

The question for policymakers then becomes what sanctions or combination of sanctions might raise the cost of Iran's nuclear pursuits too high for the regime to bear. Narrowly targeting sanctions to specific individuals and companies does not work: Khatam al-Anbia, the Islamic Revolutionary Guard Corps (IRGC)'s economic wing, can shift operations from one front company to another quicker than international agencies can designate them. The only way to plug such loopholes is to sanction entire industries.

Banking sanctions have proven themselves effective. Russia and China may condemn them, but as the North Korea experience shows, the international financial system gives Moscow and Beijing little choice but to comply. Sanctioning oil exports is wise, although two can play the insurance game. A single Iranian mine dropped into the Strait of Hormuz would send insurance rates surging for all ships traversing that waterway. Blocking Iran's gasoline imports is trickier: While the impact would be crippling, any challenge to the blockade could accelerate military conflict.

Other sanctions are also important. Banning international air travel to and from Iran would not only isolate the regime, but would also undercut Khatam al-Anbia's bottom line, as the IRGC controls not only 25 gates at Imam Khomeini International Airport but also the entire Payam International Airport near Karaj. Forcing ordinary Iranians to fly from Turkey or Pakistan would not be too high a price to avoid military conflict. Preemptive contract sanctions-declaring contracts signed after a specific date with Tehran to be null and void-would also undercut the willingness of Chinese, Russian, and Indian firms from profiteering off the sanctions regime.

As important as the sanctions are is how they are applied. Leverage comes not from gradually ratcheting up sanctions, but rather from imposing them all at once as the international community did with Libya after the Lockerbie bombing. Rather than offer Iranians economic and diplomatic inducements—-a strategy that, as with Pyongyang, incentivizes bad behavior-Western powers can lift sanctions in response to changes in Iranian behavior.

Iranians are nationalistic and would rally around the flag in event of military strikes, but they have never accepted regime propaganda blaming their economic woes on the outside world. Indeed, every time gasoline has run short and food prices have increased, Iranians direct their anger at the regime. It is that anger that the outside world should encourage.

There is no magic formula and sanctions alone will not stop Iran's nuclear program. The West should support Iran's nascent independent trade union movement, and help Iranians break the government's attempts to impose internet controls. Any coherent strategy should have diplomatic, economic, informational, and military components. Sanctions, however, are a keystone to a broader strategy.